“Joe was a good merchant but not a good salesman,” former CEO and chairman John Shields said, drawing laughter from the large crowd that came to hear him speak at CLU’s Corporate Leaders Breakfast Series event in Thousand Oaks.

Coulombe was once quoted by Fortune magazine as saying he “can’t remember” what the selling price was when he sold to German businessman Theo Albrecht.

Shields was retired from Mervyn’s when he took over at Trader Joe’s in 1987. He had met with Coulombe — a former fraternity brother — over lunch in Pasadena, and Coulombe told him he was having expansion problems. The company had 24 stores in Los Angeles, Orange and San Diego counties at the time (today it has more than 300).

“We’re just not growing,” Coulombe told Shields, who agreed to take a look at the situation. He proceeded to interview many of the company’s 650 employees and learned Coulombe had been running the place as a “benevolent dictator.” Shields described Coulombe as the “ultimate micro-manager,” sending long, esoteric essays on retailing to his store managers, who would promptly throw them away.

When the two met again to discuss what Shields had learned, he told Coulombe: “I disagree with you. I think this company can grow. But not how you run it.”

Shields employed a down-to-earth style of leadership, regularly getting out of the office to interact with employees and customers, and never having a secretary. Under his leadership, Trader Joe’s grew to 174 stores, and from $132 million to $2 billion in annual sales.

Unions haven’t been interested in organizing Trader Joe’s, he said, because employees are treated fairly.

“A store manager has two instructions: maximize sales and take care of the customers,” he said. “We have smart people who work for us.”

At Trader Joe’s, 99 percent of promotions come from within, and there’s only a 4 percent turnover rate. “We can offer people lifetime employment,” Shields said.

Today, Trader Joe’s has no debt and is the 12th largest private company in Los Angeles County, Shields said.

The moral of the story, he said, is “you can’t be a control freak as a CEO. Stretch your people. Be a coach, not a dictator.”

The secret to Trader Joe’s overall success, Shields said, is a well-executed business plan.

Trader Joe’s works to be an ethical company that treats people fairly, whether they are employees, suppliers or customers. It also has low capital requirements. Shields said it can open a store for about $500,000.

Shields retired in 2001 and now lives in the Thousand Oaks retirement community University Village. He said he felt like a father leaving his family when he departed Trader Joe’s. As long as Trader Joe’s has “the right CEOs” who stand by the culture, “these terrific kids will be fine,” he said.

Shields’ talk was well-received, judging by the comments people were making after he finished.

“I thought it was excellent,” said Agoura Hills resident Carla Scherr, who appreciated his willingness to empower employees.

Thousand Oaks resident Lourise Hodges enjoyed his attitude toward employee mistakes, which happen occasionally because staffers are given latitude to make their own decisions helping customers.

“No one will put us out of business with one decision,” she repeated him saying after he finished. “I thought that was great. I loved that.”